How to calculate the cost of the raw material?
Direct costs are costs that are specifically related to the product itself, such as the price paid for ingredients used to prepare a meal at home or the wax used to make candles. Indirect costs, on the other hand, are the expenses related to manufacturing that are not specifically related to the product. There are different methods for calculating the cost of raw materials. What is the process for determining the cost of raw materials? What are the steps involved in determining the cost of raw materials Step 1: Determine the total cost of each item on the inventory list. Step 2: Take all the direct costs of the raw material and add them together to get a subtotal. Step 3: Subtract this subtotal from the total expenses to get an indirect cost amount. How do you determine direct and indirect costs when calculating for a manufacturing company? Raw materials are the basic elements of a product. These…